Copyright Notice

Everything that appears on this blog is the copyrighted property of somebody. Often, but not always, that somebody is me. For things that are not mine, I either have obtained permission, or claim fair use. Feel free to quote me, but attribute, please. My photos and poetry are dear to my heart, and may not be used without permission. Ditto, my other intellectual property, such as charts and graphs. I'm probably willing to share. Let's talk. Violators will be damned for all eternity to the circle of hell populated by Rosanne Barr, Mrs Miller [look her up], and trombonists who are unable play in tune. You cannot possibly imagine the agony. If you have a question, email me: jazzbumpa@gmail.com. I'll answer when I feel like it. Cheers!

Wednesday, March 7, 2012

Has America Lost It's Drive? - Pt. 4

In Part 3 of this series, (at RB, at AB) I wondered a couple of things.

- With the vehicle/1000 people number in the range of 825 to 845 since 2004, is the market near saturation?
- Is the January sales number of 14.2 SAAR (seasonally adjusted at annual rate) enough to maintain the vehicle/1000 people number?

For the first question, I have to again credit Roger Chittum for pointing me to this 2007 paper, Vehicle Ownership and Income Growth, Worldwide: 1960-2030, by Dargay, Gately and Sommer (32 page pdf, data through 2002.) There's a lot to this paper, including projections into the future for vehicle sales and fuel consumption, worldwide. My immediate interest is in their use of a Gompertz function to estimate vehicle market saturation as a function of per-capita income.

Here is one of their graphs.

Graph 1 Vehicle/1000 Gompertz Function of Per-Capita Income

Their model indicates flattening above about $30K per year, and leads to a saturation point in the U.S. of about 852 vehicles per 1000 population. Saturation points for various countries also depend on urbanization and population density. See the paper for details and background.

This indicates that the U.S market is about 97% saturated, give or take a point.

What does that suggest for vehicle sales going forward? Karl Smith led off the month pointing to this graph from Calculated Risk, estimating light vehicle SAAR for February at 15.1 million. With that, on to question 2.

I already have the data in hand for vehicles/1000 population (see part 3.) The data for the Calculated Risk SAAR graph comes from BEA, Table 7.2.5S. Plotting a scattergram of YoY change in Vehicles/1000 population vs annual average SAAR for the years 1990 to 2009 gives us this picture. (See notes, below.)

Graph 2 SAAR and Change in Vehicles/1000 Population

This suggests that the break even point for vehicles per 1000 is right around 14.7 million annual average SAAR.

The official vehicle/1000 numbers are only available up to 2009. But we have the SAAR data for 2010 and 2011. Annual average SAAR for 2010 is 11.77; for 2011, it's 13.05. You probably don't want to take the values suggested by Graph 2 too literally, but seeing the vehicle/1000 number slip to around 815 for 2011 should be a reasonable expectation. This is still slightly above the 95% saturation level.

Average light vehicle SAAR for the first two months of this year is 14.65 - right at the break even point for vehicles/1000 population.

Notes on Graph 2

The red dots represent data for 2001 and 2002. The SAAR values look reasonable. The changes in vehicles per 1000/population do not. An increase of 25 in one year, from 800 to 825, followed by a decrease of 10 in the following year with SAAR, nearly identical (17.46 and 17.15) makes no sense. An average of the two, plotted for both years as yellow dots, by some odd coincidence, lies exactly on the best fit line.

The R^2 value of .43 is less than stellar, but not terrible.

Eliminating the two questionable points raises R^2 to a respectable .65.

Change in Plans No. 2. Stock Market Musings are now located at Amateur Elliott

WELCOME READERS

Disclaimer

Do I need to point out that I am not a financial adviser, registered stock analyst, or anything other than a guy playing with ideas for his own amusement?

Get your own data, do your own thinking, make your own decisions. I am not telling anybody to do anything with even a single penny of their assets. Happy Speculating!

Gold - via www.kitco.com

Change in Plans

Starting Sunday, Feb. 6, 2010, light-hearted stuff has been moved to a new blog. If you are meant to find it, you probably will. If you need directions, write me.

Meanwhile the heavy-hearted - and heavy-handed stuff stays here.

Cheers!JzB

Rules of Engagement

Over at Angry Bear, Mike Kimel has posted a list of things to think about, if you want to be taken seriously. It might be worth your time to check it out. A few are specific to his situation, most are not.

Examples:#1 Don't cite authority as proof.#2 Get your data from a reputable source.#7 Do not argue by assertion.#15 Time moves in a single direction.